UK’s HMRC Explores £420 Million Debt Collection Services Contract for 2028
The United Kingdom’s HM Revenue & Customs (HMRC) has begun engaging with the market as it considers the future of outsourced debt collection services from 2028.
HMRC published a Preliminary Market Engagement Notice on August 24 outlining a potential requirement worth an estimated £420 million including VAT over a maximum eight-year period beginning in September 2028.
The tax, payments and customs authority said it is still at an early stage of assessing its delivery and procurement options. Key elements, including the commercial model, procurement route, contract duration, division into lots and number of suppliers, have yet to be determined.
The initial market engagement is focused on social value, although HMRC indicated that later discussions could cover areas including artificial intelligence, technology, vulnerability management, transition planning and supply-chain resilience.
HMRC Looks Across the Debt Recovery Lifecycle
HMRC is exploring capabilities covering the full debt recovery lifecycle rather than debt collection alone.
Potential requirements identified in the notice include debt collection agency services, customer contact and engagement, affordability assessments, vulnerability identification and support, overseas debt recovery, data enrichment and tracing, debt analytics and predictive modelling.
HMRC is also considering digital self-service repayment tools, open banking-enabled repayment and affordability solutions, fraud and error analytics, and performance reporting.
The department said it is particularly interested in understanding how suppliers could combine these capabilities to support fair and sustainable collections while improving recovery outcomes, customer experience, operational resilience and value for money.
The approach aligns with the UK government’s wider debt strategy, which emphasizes tailored recovery, stronger data use and digital tools.
Data and Technology Could Play a Larger Role
HMRC’s preliminary requirements indicate that technology could form a significant part of the future delivery model.
Data enrichment and tracing could help improve customer contact, while analytics and automation could support decisions about appropriate treatment strategies. Affordability tools and vulnerability identification are also among the capabilities under consideration.
The direction reflects the 2026–2030 Government Debt Management Strategy, which calls for greater use of data, analytics, digital self-service, automation and AI across government debt management. The strategy also emphasizes earlier engagement and repayment approaches that account for individual circumstances.
At this stage, however, HMRC has not committed to any particular technology, operating model or supplier structure.
Social Value Shapes Early Market Engagement
The current engagement is specifically examining how a future debt collection contract could generate broader social value alongside its core services.
HMRC is seeking supplier input on potential benefits related to economic growth, skills and employment, supply-chain resilience, innovation, small and medium-sized businesses, voluntary and community organizations, and wider community outcomes.
Further market engagement may examine other aspects of the procurement, including AI and technology, commercial and fee models, vulnerability management and delivery structures.
The emphasis also reflects the government’s broader objective of strengthening partnerships with private-sector organizations to develop innovative debt resolution approaches while delivering social value and consistent standards.
Existing HMRC Contract Runs Through TDX Group
HMRC currently works with TDX Group, which is owned by Equifax, under a managed collection services contract awarded in 2022.
The existing arrangement was valued at £240 million and began in March 2022. It was awarded through the government’s Debt Resolution Services framework.
The newly announced market engagement is looking further ahead to services potentially beginning in September 2028. HMRC emphasized that its £420 million estimate represents the maximum potential expenditure over eight years and remains indicative.
If the department moves ahead with a formal procurement, an additional notice will be published.
Government Expands Focus on Debt Resolution
HMRC’s planning comes as the UK government pursues a broader modernization of public-sector debt management.
According to the 2026–2030 Government Debt Management Strategy, total overdue debt across the government stood at £53.5 billion as of March 2025, while £102 billion was recovered during the 2024–25 financial year. The strategy identifies better data, earlier intervention, tailored treatment and digital capabilities as priorities for improving government debt resolution.
It also calls for stronger private-sector partnerships and expanded access to digital tools, including AI and analytics, while maintaining standards around fairness and affordability.
HMRC’s market engagement provides an early indication of how those priorities could influence one of the government’s future outsourced collection arrangements. For now, the procurement remains exploratory, with its final scope, supplier model and contractual structure still to be determined.
